Morgan Stanley Upgrades Honeywell Aerospace to Overweight With $205 Price Target After Sharp Selloff

Morgan Stanley upgraded Honeywell Aerospace (HONA) to overweight from equal weight on August 19, setting a price target of $205 per share, which implies nearly 28% upside from Tuesday's close. Analyst Kristine Liwag argued that the stock's valuation, which had fallen to roughly a 35% discount to aerospace peers, now more than compensates for the company's fundamental headwinds. Liwag acknowledged persistent concerns, including below-peer revenue and EBIT growth, limited margin expansion, weaker free cash flow conversion relative to competitors, and lower next-generation commercial original equipment content that could constrain long-term aftermarket opportunity.

Despite those reservations, she concluded that the discount embedded in the share price had become excessive. The upgrade triggered a rally in HONA shares on August 19. The move follows earlier price target cuts from other banks, including BMO Capital lowering its target to $209 from $276 and Wells Fargo cutting to $195 from $250, both after the company reset its outlook in early August.